Small changes to how you spend your money can make a significant difference.
To make changes it is important first to understand your current income and expenditure. When this is done properly many people are surprised at how much they spend on some things. You can start by putting together a budget to help you understand:
- what you’re earning and spending
- where you might be able to cut costs or make savings
How much money do you have coming in each month?
Every budget starts with this figure – start by listing all your sources of income, such as pay or benefits. Put down a precise number.
There may be ways you could increase your income, for example:
- claiming benefits that you are entitled to
- paying the correct tax on your earnings
How much money do you spend in a month?
Look back over the last few months, include online subscriptions, eating out receipts, travel, impulse buys, supermarket bills, clothes, bills, rent (or mortgage), sports, personal treats – the list can be very long.
You can use online budgeting tools to create a personal budget. See:
- Citizens Advice – work out your budget
- National Debtline – your budget
- Money Manager Tool for Universal Credit customers – to help people budget on Universal Credit
Once you’ve completed your budget, you’ll know how much money you have left once your essential expenses have been paid.
You may also find you can reduce some of your expenses, for example:
- moving to a cheaper fuel supplier or phone provider
- finding lower price car and home insurance
If you’re not sure how you are spending your money, you should keep a spending diary for about a month. This will give you a clearer picture of where you spend your money. Also, if you’re part of a couple and have joint expenses, you should both complete the budget sheet.
Work out what you can go without – ‘needs vs wants’
Figure out what is – and what isn’t – your essential spending. Mortgage, rent, insurance, groceries and utility bills are all ‘needs’ you can’t go without.
But the real change can come from cutting back on ‘wants’. This is money spent on things like eating out, fitness, entertainment and clothes.
Most of us keep track of our bigger monthly bills like the rent, mortgage and utility bills but it can be harder to keep track of all those smaller spends or ‘wants’ during the week.
Our ‘Where did my money go’ guide can help you take a closer look your weekly expenses and help you find some easier money-saving wins.
